How does the progressive income tax help reduce the inequality of income in the United States?
What will be an ideal response?
Taxing higher-income groups at a higher rate and subsequently channeling some of the tax revenue to payments or programs for lower-income groups helps redistribute the nation’s wealth, thereby reducing the inequality of income in the United States. Income inequality measures are more meaningful when examining after-tax incomes than per-tax incomes.
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If the Fed sells government securities to a member of the nonbank public, then the resulting effect on the quantity of money is
A) that there is no change in the quantity of money. B) much larger than if the securities were sold to a bank. C) much smaller than if the securities were sold to a bank. D) the same as if the securities were sold to a bank. E) None of the above answers is correct.
A countervailing duty is a tariff that is levied to counteract
A) the dumping of goods in the domestic market by foreign firms. B) a sudden surge of imports which hurt a domestic industry. C) subsidies given to foreign firms by their own governments. D) the tariff on domestic goods that are enacted by foreign governments. E) low prices for imported goods that are made in countries with low wages.
In the simple deposit expansion model, if the Fed purchases $100 worth of bonds from a bank that previously had no excess reserves, the bank can now increase its loans by
A) $10. B) $100. C) $100 times the reciprocal of the required reserve ratio. D) $100 times the required reserve ratio.
Which of the following is an example of a progressive tax?
A. Social Security payroll tax. B. The federal income tax. C. An excise tax. D. A local sales tax.